Digital Supply Chain Green Thursday – SAP Integrated Business Planning
Thank you very much for sharing the interest for the topic of this article of the Digital Supply Chain Green Thursday blog series. Every Thursday we will together take a closer look at one of the SAP Digital Supply Chain solutions and how they contribute to sustainability in supply chains all over the world. Have fun in following the blog, we invite you to get in touch with us and feel free to share the blog posts among your peers. Here you can find last week’s article aboutprolonging asset lifetime by using an combined data and physics-based digital twin approach.
Deliveries become more and more demanding
E-Commerce is a rising trend since a long time and during the current COVID-19 pandemic it accelerated even more. A very understandable development, when everyone is asked to stay at home as much as possible and online shopping provides that much comfort. Customers order around the clock, goods like household goods and even groceries are expected arrive at the doorstep instead of being shipped in bulk to a retailer. This trend is expected to stay even beyond COVID as people discovered the convenience of online shopping. To be honest – would you like to give up the comfort? On the other hand, the increased customer service need makes it more difficult for businesses to determine how to stock their warehouses and when to produce certain products. More real-time sensing of demand, better management of inventory strategies and real-time visibility upstream into the supply chain are required and good planning leading to consolidated shipments can save a lot of extra transportation and wasted energy. Obviously, a pandemic puts a whole new level of complexity into this equation. How can businesses deal with this enhanced complexity in planning efficiently?
Software makes complexity manageable
Organizations often use software to manage all this complexity within the global network of production sites, warehouses and global markets with customers demanding fast delivery of their products. These planning tools support in coordinating production and inventory capacities by taking into account the forecasted short- and long-term demand. Additionally, businesses rely on the capabilities of the software tools to quickly come up with solutions for supply problems – like a sudden pandemic that shuts down production sites and global trade routes.
SAP supports businesses to use SAP Integrated Business Planning
SAP Integrated Business Planning supports holistic Supply Chain planning
SAP Integrated Business Planning is composed of six functions to enhance the overall planning capabilities of a company while leveraging a smooth integration into S/4HANA.
SAP Integrated Business Planning combines six planning processes; Source: SAP
The Supply and Operation Planning function serves as a core function to balance supply and demand by taking important constraints into consideration. Based on a single unified data model, all necessary information can be taken into account for an overarching planning. What-if scenarios allow to test, analyze and prepare for different situations before they happen. In the Response and Supply Planning function, the plans can be easily adapted to surprising challenges with fast matching of supply and demand on an operational level and rule based as well as heuristic decision-making support. The Demand Planning functionality enhances the forecast accuracy when determining one of the most important information for every business. Statistical forecasting can be automated and supported with Machine Learning capabilities to also properly include external information like weather or Social Media data into the demand forecast. The forecasting capabilities are not limited to the demanded amount of each product but can as well tell in which region the product will be demanded. This information is especially important when optimizing the inventory with the Inventory Optimization function. With a well-planned distribution of products in the area where they will be demanded, the efficiency of inventory and working capital can be maximized and unnecessary transport can be avoided. With the Demand-Driven Replenishment capability the variation of demand and supply is dampened by establishing buffers at strategic decoupling points. Through the visibility of the buffer status, replenishment strategies can be driven from actual demand instead of forecasts.The SAP Supply Chain Control Tower gives additional insights by enabling an end-to-end visibility across the supply chain network, monitoring important KPIs and managing special exceptions with root-cause analysis.
Greater efficiency and better transparency lead to greater sustainability
By combining and fully leveraging on the capabilities of SAP Integrated Business Planning, businesses can truly improve the sustainability within their operations from the start. Better demand forecasting and demand-driven Supply Chain strategies prevent waste and emissions from unnecessary production as well as avoidable waste from outdated products in the inventory. Furthermore, including the location into the demand sensing step allows businesses to avoid transportation by producing product and procuring materials close to the customer. The scenario-planning capabilities additionally allow to investigate on the economic effects of a supply chain optimized by sustainable constraints – and find the best solution for business, environment and society. Extending the scope of planning onto the supply chain and cooperating within the network, enables the supply chain to monitor and improve its performance on a more global level by ensuring compliance and monitoring progress constantly. Thanks to the web-based User Interface and an Add-In into Microsoft EXCEL, everyone can get the information they need in the form that suits their task best. This supports better decision-making and greater transparency along the Supply Chain.
The combination of web-based UI and EXCEL Add-in ensures easily accessible insights and an intuitive planning environment; Source: SAP
Improve your Supply Chain Planning from End-to-End
Turn challenges into opportunities by using SAP Integrated Business Planning!
I hope you found this blog post helpful and interesting. Please make sure you follow me to not miss any future blog posts in this series and stay informed about how a Sustainable Supply Chain is supported by SAP Digital Supply Chain solutions! Please have a look at my earlier posts as well: